WASHINGTON – The U.S. Postal Service (USPS) today released an important update to its business plan for returning to profitability and long-term financial stability. While fundamentally consistent with the approach advanced by the Postal Service over the past year, the plan released today incorporates important refinements of financial projections and recommended legislative reforms.
“The plan we have developed requires a combination of aggressive cost reduction, rethinking the way we manage our healthcare costs, and comprehensive legislation to reform the business model of the Postal Service,” said Postmaster General, Patrick Donahoe. “If provided the flexibility to quickly implement this plan, we can return to profitability and better serve the American public. If not, we risk becoming a significant burden to the American taxpayer.”
At its core, the plan requires the reduction of annual costs by at least $20 billion by 2015, rising to more than $22 billion by 2016. This cost reduction is necessary given projected declines in First-Class Mail volume, which has already has dropped by 25 percent since 2006. However, the Postal Service can achieve only a portion of these reductions under current business model constraints; legislative changes are needed to achieve the full $20 billion in cost reductions.
In the absence of legislative reform that quickly enables meaningful operational changes and cost reductions, the Postal Service could incur annual losses as great as $18.2 billion by 2015, and accumulate a total debt of $92 billion by 2016. “These prospective losses would be unsustainable and highly undesirable,” said Donahoe. “Fortunately, as our plan demonstrates, such an outcome is entirely avoidable; the Postal Service can be profitable over the long term and not require taxpayer support.”
The Postal Service is a self-financing federal entity that generates its revenue from the sale of postal products and services.
The comprehensive five-year plan provides an achievable roadmap to long-term financial stability and independence from taxpayer support, and provides for full repayment of $12.9 billion in debt currently owed to the U.S. Treasury. A central tenet of the plan is that success is not dependent upon achieving a mix or subset of reforms: the scale of the financial challenge requires that all of the major elements be pursued concurrently and fully executed within a short window of opportunity.
Among the major legislative reforms recommended, the most significant include enabling the Postal Service to provide employee health benefits independent of federal programs ($7.1 billion annual cost reduction), and transitioning to a national five-day delivery schedule ($2.7 billion annual cost reduction).
The Postal Service also is aggressively pursuing the realignment of its mail processing, retail and delivery operations, which is expected to yield more than $8.1 billion in annual cost reduction. Additionally, the Postal Service is seeking other significant cost reductions and is continuing efforts to grow or retain revenues within its current business model.
The plan has been subjected to independent review and analysis by Evercore Partners, one of the nation’s leading independent investment banks and a prominent financial advisor on major corporate restructurings. Evercore Partners played an important role in analyzing Postal Service models and assumptions, and validating the approach taken by management to develop the plan. The plan also reflects prior business model analysis from McKinsey & Company and revenue projections from the Boston Consulting Group.
“We have set out a roadmap to put our current financial crisis behind us and we are highly confident that it is achievable,” said Donahoe. “However, our success depends on whether we can quickly implement our proposed changes, and that depends on whether we can gain the necessary legislative reforms we need to move ahead.”
The Postal Service is a vital part of the nation’s economic infrastructure, providing a reliable, secure, and affordable delivery platform that sustains a $900 billion mailing industry that employs 8 million people.
The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.
This country is going to hell. What are people going to do now? Can anyone answer this. Jobs are going away while the rich just keeps getting richer. Waiting for the day when the rich start eating there own, because they will have no one else to steal from. May all you people get what you deserve.
Cost reductions? When, Where, How? Who REALLY GOVERNS THE USPS?
Politicans, behind the scene power groups, lobbist, and union and management pressure groups. An outdated government agency to remain doing same service at any cost!
With fuel cost increasing and revenue decreasing craft and management unions may push to deliver junk mail on Sunday to keep America conneced. A salient point would be rural America would have advantages to participate at blue lite specials at K Marts if any remain.
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Buyouts and early retirement makes cents. Bottomline this is the best means to reduce employee numbers which will yield monatary results in time. Headquarers management those imported into the system by political connectio with high corporate salaries need to be eliminated without any buyout; no money just eliminate positions.Board of governors should be eliminaed as their decision making process yields no service or monatary results. These people in general are seclected by who they know and no what they know in business sense. This group is comparbale to trash collectors attempting brain surgery. Results is present state of USPS FINANCIAL CONDITION. 3.3 BILLION DOLLAR LOSS 1st QUARTER 2012.. their seclection of high levell personnel is disguisting. Comparable to Indanapolis colts; should get a first round draft choice as a new PMG.
Al Bundy; Al your statement will come to be. The unions and management have self concerns for their groups and not the entire service that we all make up. I need to work Fred and his group do not stand for the majority of dues paying members.
These Idiots couldn’t run an effing McDonalds nevermind the USPS. Fire Donahue Yesterday!
PMG, has a plan to destroy America greatest infrastrictire the post office, and every thing that he has come up with does nothing more than move in the direction to destroy the Postal Service. In 2006, the Republican lead Congress put a $5.5 billion burden on the Postal Servcie, and congress if eliminate that the Postal Servcie would be in the black $200 million dollars the first quarter.There have been a number of congressman and Senators who have ask the PMG to stop with his destructiive plan and rethink of how the Postal Servcie can generate more revenue, but he don’t have a plan in that direction. So, what I propose if he continue with his plan, that he lose his retirement all his beenefits be cut as well, and he start leading by example, to include every administrative employee who earns a higher salary than the President cabinet members? That would force him to come up with a better plan, because he would be affected as well, stop being a job killer and stop being a voter surpressor as well,. American can do better, if they use their imagination
Evercore Partners has been chosen by the PMG to manage the $44 BILLION in health care funds. That is why he wants us out of the federal program. He can pass that business on to them. Of course Evercore agrees, it is the only way they will get their hands on our health care funds. If they invest it poorly and we lose money so goes our health care. Evercore has lost investment money over the last five years, so think about it.
what about Donahoe going buyout. He dont think of other people ,, think himself…
gas prices are going to rise significantly this year and future years,USPS has got to go to five day. The USPS should cut management 35% and must get concessions from craft unions on wages for new hires and part time work force. The new health care plan would stop congress from stealing money from the USPS revenue to supplement the federal workforce so as to hide the true costs to taxpayers.
We have a choice, get closer to being at break even or get re-absorbed by the Federal government and work under the general fund as regular federal workers (taxpayers and no unions). Thats the way I see it.
Now Donahoe is talking like a republican! Stating he doesn’t want the Postal Service finanical situation to be a burden on the taxpayers. Now that’s smart! This is just a statement trying to get the American people to agree with doing away with the mail service! People, don’t be fooled. Donahoe doesn’t care anything about the mail service or thousand of americans jobs who are employed at the postal service! He (Donahoe), obviously has been bought out by higher powers that want to privitize the postal service! This has been the repiblicans plan from day one that the heavy pension burden was put on the postal service by Bush in 2006! America, don’t be fooled, if the postal service goes under, you can believe stamps won’t be 44 cent or 50 cent; nor will the mail be delivered daily or to every household in america as it is now! Congress please don’t let this happen! America is watching and depending oon you!
Cost effective operations must eliminate waste. 6 day street delivery small community offices are wasted expense as the need does not justify the cost.
Revenue will continue to decline and cost will increase. Fuel cost and workhour salaries will increase; 6 day street delivery is a waste as the primary product is advertising mail which is high distribution cost and low revenue. Small community post officies remain open and the public question as to the justification and postage has increased. Politican, craft and management unions must recognize that the supp;y for postal services exceeds the demand which results in negative returns. Revenue generation will not increase as USPS services as once known as means of communication is past history due to advances in communication technology resulying in electronic mail diversion via instant messaging for personal and business needs. Online electronic communication is a product of the 21st century. The need for the USPS in personal and business communication is past history a need in the 20th century when communication was via the delivery of a message to a physical address in a 2-3 time frame with the need to purchase a postage stamp and delivery by the USPS. This means now is used to physically deliver a piece of bulk business advertising mail. USPS must adust to decreasing need for services and adjust cost to operate cost effective to breakeven.
How can the Postal service drop employees out of the Federal health plan when emplyees have been in it for years? Maybe new hires who know this before they start employement. How can the Postal Service do this and other federal agencies not?.
How about current Postal retirees who are now under OPM, could they yank them out also.This is a breach of contract is it not?Why are Postal employees always the sacrificial lamb among Federal Agencies?